Ship financing scheme designed to help shipyards

This content was published before 1 July 2021 by GIEK or Eksportkreditt Norge

“The maritime supplier industry has undergone extensive restructuring over the past two years. Vessel demand was previously dominated by the oil industry, but now the focus is on completely different boat types. A major reorientation has occurred, and this new measure is in my view highly welcome” says Export Credit Norway’s Director of Lending – Ocean Industries, Olav Einar Rygg.

In the Fiscal Budget 2018, the Government has proposed a new loan and guarantee scheme for ship purchases from Norwegian yards. The new scheme, which will have a guarantee cap of NOK 10 billion, is intended to help Norwegian yards win more contracts, and holds significant promise for Norwegian shipping companies, yards and their sub-contractors.

Until now, Export Credit Norway has only been authorised to provide financing for Norwegian customers wishing to purchase ships from Norwegian yards for use in foreign trade or the offshore industry. If the new scheme is approved by the Storting (Norwegian parliament) it will allow Export Credit Norway to make financing offers for all new ships exceeding 100 GRT (gross register tons), including ships due to be deployed in Norway.

Rygg finds the order-book restructuring implemented by Norwegian shipyards highly impressive, and expects the new scheme to fuel further growth. “The new loan scheme allows us to finance, for example, new fishing boats, wellboats and vessels for use in domestic passenger traffic, including local shipping services,” says Rygg.  

Numerous enquiries already

The new scheme has been requested and advocated for a long time, and has therefore been warmly welcomed by the shipbuilding industry. “Under the old rules, for example, a fishing company in the market for a Norwegian vessel could build the boat abroad and obtain financing from us for the Norwegian equipment installed on board. However, no loan was available if the boat was to be built in Norway. Supporting only shipbuilding abroad and not in Norway has had a distorting effect on competition,” explains Rygg. Rygg expects the scheme to be of interest for many projects. Export Credit Norway has already received numerous enquiries, despite the fact that the scheme will only become operational in the first half of 2018.

The loan scheme also promises to ensure skills-retention and protect jobs at Norwegian shipyards.

Olav Einar Rygg, Export Credit Norway

Keen to get going

“During the first six months of the year, Norwegian yards entered into 28 new contracts, but only seven of these met the conditions of the current loan scheme. Under the new scheme, it is likely that all 28 transactions would have qualified. This indicates the potential significance of the new arrangement for shipyards in Norway,” says Rygg. Norwegian yards have faced difficult conditions in recent years, due to weak demand and reduced margins. Restructuring is a capital-intensive exercise for shipyards, and the new loan scheme for Norwegian shipyard customers is intended to secure continued growth in Norway’s maritime industry cluster. “Although the industry has successfully reoriented itself, it is still struggling. Such change processes are expensive, and the entire industry is under financial pressure. Measures of this type are therefore vital,” continues Rygg, before adding: “The loan scheme promises to help ensure skills-retention and protect jobs at Norwegian shipyards. We therefore understand the impatience of those who want to get going.”  

Questions and answers – the ship financing scheme

When will the new ship financing scheme become operational?

The new scheme must first be approved by the Storting (the Norwegian parliament) through adoption of the fiscal budget. The scheme must then be operationalised by means of amendments to the Export Credit Act and related regulations. Statutory and regulatory amendments are subject to public consultation, and this is expected to take place at the end of November/beginning of December 2017. The invitation to participate in the public consultation will state when the scheme is to enter into force.

Can I already apply for financing under the new scheme?

Yes, you can. However, Export Credit Norway will not begin processing your application until the fiscal budget has been adopted. Once this occurs, we will begin considering received loan applications. However, all processing of applications is subject to the necessary statutory and regulatory amendments being approved and taking effect.

How do I apply for financing?

You can apply for financing under the new ship financing scheme via the Export Credit Norway website. For more information on the application process, please see the application process FAQs.